Farm Bill- Budget; Biofuels; and, the Ag Economy- Tuesday

By Keith Good

Wednesday

Nov 20, 2013 at 12:01 AM

Farm Bill- Budget Issues

ChrisClayton reported yesterday at the DTN Ag Policy Blog that, "Farmersin parts of the northern and eastern Corn Belt wouldbe collecting Price Loss Coveragepayments on their corn crops this week IF the House version of the farmbill were in place.

"DTN's market tracker shows corn for deliveryselling as low as $3.17 abushel in northeast Montana. Cashprices in several states show farmers would be receiving a target-price checkfor corn."

The DTN update noted that, "The Price LossCoverage program in the House bill is a renaming of the currentcounter-cyclical program that also increases target prices for most majorcommodities. Under the House bill, the target price for corn is $3.70 abushel. That price would likely be set for the 2014 crop ifthe farm bill negotiators were to keep the House PLC in the final bill.

"DTN's Market Tracker shows cornprices below $3.70 inparts of the eastern Corn Belt, notablythroughout parts of Michigan and Ohio. Farther west, pricesthroughout North and South Dakotaare hitting lows below $3.40 a bushel in some places withprices averaging more around $3.50 a bushel."

Mr. Clayton added that, "The U.S. Senate wasless supportive of target prices. Most Midwestsenators on both sides of the aisle opposed keeping a target price safety netin the farm bill. However, Southern senators wanted to protect prices for riceand peanuts. The Senate came up with the AverageMarket Price program, or AMP. Under this program, most commodityprice protections would be based on 55% of the Olympic average for thatcrop over the past five years. The price would also be calculatedusing base acres. Basedon tables showing annual average prices going back to 2008, the target pricefor corn likely would be in the range of $2.99 to $3.08 a bushel for the 2014crop."

Meanwhile, ErikWasson reported yesterday at The Hill's On the Money Blog that,"The dairy fight in thefarm bill conference continues to simmer, with a group of House members callingon the farm bill conference to abandon controls on milk production."

The article indicated that, "Twenty-eightmembers of the House havewritten to the conference urging that it adopt the House dairyprovisions favored by milk users and opposed by the National Milk Producers Federation."

"The Nov. 15 letter obtained by The Hill wasspearheaded by Rep. David Scott (D-Ga.)and claims the Dairy Security Act would raise milk prices by as much as 35cents a gallon, hurting the poor."

Mr. Wasson added that, "Most of thesignatories to the letter are liberals who may be unwilling to vote forextensive cuts to the food stamp programs. If the farm bill conference containssuch cuts, the votes of [House Ag Comm. Ranking Member Collin Peterson's] block could outweighthat of the liberal caucus. On the other hand, a compromise with smallercuts to food stamps could require a large number of liberalDemocrats to get through the House given likely defections from TeaParty conservatives."

And a news release yesterdayfrom the International Dairy FoodsAssociation (IDFA) noted that, "IDFA recently created aflyer that shows how the Dairy Market Stabilization Program wouldaffect recipients of the Supplemental Nutrition Assistance Program,or SNAP. If the DMSP was triggered only one month per year, SNAP recipientscould be forced to pay nearly $1 billion to meet dairy consumptionrecommendations; that's the equivalent of a 25-percent increase in the SNAPcuts in the Senate bill."

More specifically on nutrition issues, Bloombergwriter AlanBjerga reported earlier this week that, "Congressional critics lookingto cut the nation's food stamp bill - which has doubled in the past five years- are pointing to what some say is a loophole in the law:

"If a state gives a resident as littleas $1 a year in heatingassistance, it allows that person's household to automatically qualify for anaverage of $1,080 inadditional food stamps annually from the federal government.

"That's what 14 states, including New York and California,and the District of Columbiahave done."

The Bloomberg article noted that, "Members ofa House-Senate conference committee are scrutinizing food stamp eligibilityrules as they seek to reconcile different versions of a bill that would setagricultural policy for the next five years. Either would cut food-stampspending, mostly by altering who can get benefits. The Senate would cut roughly $4 billionover 10 years, largely by toughening the heat-and-eat requirement. The House trims another $35 billion byfurther tightening eligibility and adding drug testing and work requirements."

Mr. Bjerga added that, "The House,as part of a plan to shave $39 billion from food stamps, raises the requiredstate contribution under the heat-and-eat provision to $20 a year. That would save$8.7 billion over a decade as states drop the program because of theincreased cost. The House would also cut $11.6 billion by ending'categorical eligibility,' in which enrollment in other social servicesautomatically qualifies a recipient for food stamps even when eligibility underthose programs are less strenuous than for the food aid."

Also, MattiasGugel reported yesterday at The BostonGlobe Online that, "Unemployment remains stubbornly high. Paycheckgrowth, especially for minimum-wage workers, is stagnant. Yet even lacking afull economic recovery, millions of needy families around the United States and in Massachusetts are losing a portion oftheir federal food stamp benefits this month.

"Massachusettsofficials, community food banks, and advocates for the poor are bracing for thefull impact of a $95 million cut in nutrition assistance for the state over thenext 11 months. The cuts are part of a $5 billion nationwide reductionprompted by the expiration of a boost that was included in President Obama's2009 stimulus package."

Meanwhile, a recent Amber Waves update from USDA'sEconomic Research Service ("SNAPParticipation and Diet Outcomes") pointed out that:

"-Increasing interest in the healthfulness ofthe diets of those who participate in USDA's Supplemental Nutrition AssistanceProgram (SNAP) led ERS researchers to link several unique data sets to examinethe effect of SNAP on the nutritional quality of adult participants' diets.

"-The researchers found that participation in SNAP had a modest effect on dietquality: a small positive nutritional effect was counterbalanced bya small negative effect.

"-Although SNAP participants had slightlyless healthy overall diets than those of low-income nonparticipants, theyconsumed less sodium and saturated fat."

Some Members of the Congressional Black Caucus, includingRep. Hakeem Jeffries (D.,N.Y.) and Rep. Steven Horsford (D.,Nev.) spoke yesterday on the House floor in a Special Order on hunger issues.

In part, Rep. Jeffries indicated that, "Butthe reality of the situation is that as opposed to making progress on thisissue in America, we stand here today on the floor of the House ofRepresentatives at risk of going backwards, because there are some in thisChamber on the other side of the aisle who, for some reason, think itmakes sense to balance the budget on the backs of children and seniors andthose who are hungry in America.

"There's no other way, Rep. Horsford, toexplain the fact that in this Chamber, you had people voting for a $39 billioncut to the Supplemental Nutrition Assistance Program known as food stamps."

And as a side note on the social safetynet, AnnieLowrey reported in yesterday's New York Times that, "Unless Congressacts, during the last week of December an estimated 1.3million people will lose access to an emergency program providing themwith additional weeks of jobless benefits. A further 850,000 will bedenied benefits in the first quarter of 2014.

"Congressional Democrats and the White House,pointing to the sluggish recovery and the still-high jobless rate, are pushingonce again to extend the period covered by the unemployment insurance program.But with Congress still far from abudget deal and still struggling to find alternatives to the $1trillion in long-term cuts known as sequestration, lawmakers say thechances of an extension before Congress adjourns in two weeks are slim."

Regarding the Conference Committee on theBudget, GingerGibson reported yesterday at Politico that, "The conference committee,which was created along with the deal that ended the shutdown and lifted thedebt ceiling, has been tasked with trying to find a compromise between theHouse and Senate budgets. Both sides want to avoid the scheduled $20billion sequester cut in defense spending set to go into effect in January,but Republicans want tospare the Pentagon by cutting other programs, and Democrats want to fund defense andnondefense programs at higher levels.

"If the conference committee reaches anagreement, it could avert those cuts and allow legislation to be crafted toavoid another shutdown. If it can't reach a deal, Congress will have to keeprelying on continuing resolutions."

Majority Leader Eric Cantor (R., Va.) notedon the House floor on Friday that, "The issue that is central to these[budget] discussions is not unlike the issue that has been under discussion forsome time here, and that is how do we go about seeking reform of someof the mandatory programs and trying to reach resolution there in exchange fora commensurate relief on the across-the-board budget cuts that are currently inplace."

DavidRogers reported yesterday at Politico that, "The thirteen topRepublicans on the House Appropriations Committee joined in a letterMonday urging budget negotiators to'redouble' their efforts and report a top-line number fordiscretionary spending before Thanksgiving - or no later than Dec. 2."

Also, the "Washington Insider" section of DTNreported yesterday (linkrequires subscription) that, "But while appropriations leaders havepushed for the [budget] conference committee to wrap up its talks -- preferablyby Nov. 22 or Dec. 2 at the latest to give them time to writesubsequent spending bills to fill in the details in a final budget resolution-- [House Budget Comm. Chairman PaulRyan (R., Wis.)] acknowledged concerns that the panel may not even meet its target of Dec.13 to come to an agreement. 'It's not a binding deadline,'he told reporters after a recent hearing, adding, 'We know the appropriatorsneed to get working, so we take it seriously.'

"The current continuing resolution that iskeeping the government funded expires Jan.15."

In a related article with emphasis on BudgetChairman Ryan, the budget, and social safety net variables, LoriMontgomery reported in today's Washington Post that, "Ryan's new emphasis on social ills doesn't imply thathe's willing to compromise with Democrats on spending more government money.His idea of a war on poverty so far relies heavily on promoting volunteerismand encouraging work through existing federal programs, including the taxcode."

The Post article titled, "Paul Ryan, GOP'sbudget architect, sets his sights on fighting poverty and winning minds,"pointed out that, "Ryan's interest in poverty dovetails witha largereffort to revamp the GOP, which has lost the popular vote in five ofthe past six presidential elections. Republican National CommitteeChairman Reince Priebus commissioned an autopsyof the 2012 campaign that identified 'the perception that the GOPdoes not care about people' as 'a major deficiency,' and recommended arenewed effort to 'be the champion of those who seek to climb the economicladder.'

"Since then, the search has been on fora conservative response to rising income inequality andthe record 15 percent of Americans wholive in poverty."

In addition to talking about the budgetconference committee on the House floor Friday, Rep. Cantor alsobriefly noted that, "So to get any kind of result, such as the farm bill, we are going to need a bipartisanresult."

In other Farm Bill developments, an updateyesterday at KFYO (News Talk-790- Lubbock, Tex.)indicated that, "Regarding the Farm Bill, [Rep. Randy Neugebauer (R., Tex.)] noted that staff have beenworking to come up with tentative agreements. The House and Senate met lastweek to prepare staff for full conference. He remains hopeful that an agreementwill be reached before the Christmas holiday, so that the debatedoes not enter the next crop year to help avoid uncertainty. He listed topicsto be worked on, including food stamps,considering whether the bill will be permanentlaw or an amendment to the 1949 act, and well as the differingmaturity rates of food stamps and the farm portion of the bill."

And a news release yesterdayfrom University of Missouri Extensionnoted that, "Country of Origin Labeling formeat products was written into the 2002 Farm Bill. Almost a dozenyears later, however, the saga continues.

"When Country of Origin Labeling (COOL) wentinto effect for red meats in 2009, Mexicoand Canadacomplained to the World Trade Organization that the rules did not comply withinternational agreements. WTO ruled in favor of Mexicoand Canada,prompting the USDA to rewrite COOL. However, Canada and Mexico have also challengedthe revised rules, which went into effect this year.

"Ron Plain,an agricultural economist with Universityof Missouri Extension, gave an updateon COOL at the recent 2013 Missouri Swine Institute in Columbia. He told the audience that heexpects WTO will rule against the United Statesagain and the U.S.will appeal, so the can will keep being 'kicked down the road.'"

The release noted that, "The issue has beendragging on for more than a decade and Plain says there doesn't appear to be anend in sight. Meanwhile, the revised rules remain in effect."

KelseyGee reported yesterday at The Wall Street Journal Online that, "BigU.S. meatpackers are appealing to Congress in a last-ditch effort to stave offnew federal labeling rules that require more information about the origins ofbeef, pork and other meats.

"At issue are regulations set to come intofull force Saturday that require meat processors to list details including thecountries in which livestock were born, raised and slaughtered. The U.S.Department of Agriculture issued the new rules this past spring to updateprevious country-of-origin regulations that the World Trade Organization saiddiscriminated against Canadaand other trading partners. A six-month grace period on the rules isset to end Saturday.

"Tyson FoodsInc., Cargill Inc. and other meatpackers are lobbying members ofCongress to amend the latest ruleswithin a new federal farm bill, arguing they impose unnecessarycosts on the industry. Supporters of the mandates, including U.S. beef ranchers and consumer groups, arepushing back, contending the labels will help consumers make more-informeddecisions about the meat they buy."

And on a separate policy issue, KimberlyKindy reported yesterday at the FederalEye Blog (Washington Post) that, "Four members of the U.S.House Committee on Agriculture are among the latest in Congress to write toUSDA Secretary Tom Vilsack regarding aproposal to change how safety inspections are done in poultry plants.

"The lawmakers, including committee chairmanRep. Frank D. Lucas (R-Okla.)and ranking member Rep. Collin C.Peterson (D-Minn.), support the proposed system.They asked in the letter, which was sent to Vilsack on Friday, when the agencyplans to send a final version of the proposed rule to the administration. They also asked for a timeline for when the new system would roll out to plantsnationwide."

"McCarthy said her visit was a chance to havean open discussion with farmers about the importance of biofuels. 'Wehave been working hard to make sure that the level of renewable fuels isincreasing as much as it can,' she says. 'We're hoping that with theproposal we have the opportunity to look at what those barriers are that keepfolks from accessing renewable fuels and get those numbers up.'"

The Brownfield link included audio remarksfrom Admin. McCarthy.

With respect to EPA's RFS proposal on Friday,Rep. Cheri Bustos (D.,Il.) notedlate last week that, "Today's proposal from the EPA to reduce theamount of renewable fuels defiescommon sense. Not only would this proposal hurt Illinois farmers, ruralcommunities and our state's economy, but it could also drive up prices at thegas pump and increase our dependence on foreign sources of oil. I'llcontinue fighting for the health of our region's economy and to keep ourcountry safer and more secure by standing with both Democrats and Republicansin opposing this insensible proposal."

And EvanHalper reported on the front page of yesterday's Los Angles Timesthat, "When the U.S. Navy sailed an imposing fleet near Hawaii that was poweredin part by algae and used cooking grease, environmentalists weren't the onlyones who were thrilled.

"Executives at bioenergy startups in the San Francisco Bay Area, Chicagoand elsewhere - and the venture capitalists backing them - had reason to cheer.The Obama administration has made the military, the largest consumer of energyin the country, a financial lifeline for cash-strapped alternative fuelinnovators."

The article noted that, "But the pilot voyageof the Navy's 'great green fleet' came with a troubling aspect: price.

"Thefleet's green fuel costs $26 a gallon, several times morethan conventional diesel and jet fuel. And the costly experiment came just asthe military moved into an era of deep budget cuts."

And Purdue University AgriculturalEconomist Chris Hurt indicatedyesterday at the farmdoc daily blog("HogsProvide Near $7 per Bushel Corn Value") that, "Grain farmers arelooking for new corn uses now that ethanol is not big enough. Low cornprices are encouraging end users to seek ways to add value to corn, which is now below costs for most corn growers.What about hogs? For the 2013/14 corn marketing year, hogs are offering anestimated $6.85 per bushel if the profits from hog production are assigned tothe value of corn."

Yesterday's update noted that, "The hogindustry expansion will not be large enough to return corn prices to theprevious lofty levels. However, when all animal industries are included itwill be a period of growing feed use base for corn growers."

In developments regarding trade, The WallStreet Journal editorialboard noted today that, "President Obama's second-term agenda is intatters, and now his declining clout is jeopardizing a rare pro-growthproposal-freer trade with Asia and Europe. Heneeds to spend political capital to head off a bipartisan revolt on CapitolHill."

And a newsrelease yesterday from the National Pork Producers Federation statedthat, "An ad hoc coalition of agricultural and food organizations led by theNational Pork Producers Council is urging Congress to establish criteria forrevoking a country's tariff-free access to the U.S. market if it fails to giveU.S. products treatment consistent with international trade rules. Thecoalition also weighed in on renewing beneficial trade treatment for Africannations that restrict U.S.imports."

The release added that, "In a letter senttoday to lawmakers, the coalition pointed out that 'barriers to U.S. exports inGSP beneficiary countries are widespread and are often in flagrant violation ofinternational obligations.'"

"In a separate letter toCongress, the coalition stated its strong opposition to a long-term orpermanent extension of AGOA."

Meanwhile, Reuters writer KarlPlume reported yesterday that, "Chinarejected a cargo of U.S.corn because it contained a genetically modified variety that is not approvedfor import, a trade source said on Monday."

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